Bitcoin entrepreneur Anthony Pompliano said cooling inflation is forcing investors to reassess why they hold bitcoin.

Inflation cools, conviction gets tested

Pompliano said on Fox Business that bitcoin’s inflation-hedge narrative is harder to lean on when price pressures aren’t front and center.

Pompliano said during the interview:

“I think the challenge for Bitcoin investors, can you hold an asset when there is not high inflation in your face on a day-to-day basis?”

He added:

“Can you still believe in what Bitcoin’s value proposition is, which is that it’s a finite-supply asset. If they print money, Bitcoin is going higher.”

The U.S. Consumer Price Index fell to 2.4% in January from 2.7% in December, according to the Bureau of Labor Statistics.

Sentiment hits multi-year lows

The downturn has coincided with weak sentiment.

Bitcoin’s Fear & Greed reading has dropped to “Extreme Fear,” with a score of 9.

That aligns with bitcoin’s recent slide, with the asset down about 28% over the past 30 days and trading near $68,850 at publication.

‘Monetary slingshot’ and the dollar

Pompliano argued deflationary forces could drive near-term volatility, as pressure builds for rate cuts and more money printing.

He said:

“The currency is going to be devalued at a time where deflation covers up the impact, so I call it a monetary slingshot.”